xorg-server 1.1.0 implements a new ABI that is not yet supported by ati and nvidia binary closed-source drivers. The thread firesox linked to explains the details.

So many people were running into problems with this, that the Gentoo devs have made this a blocker. This post and the discussion on the same page explains what packages you have to mask if you want to use the current ati/nvidia drivers.

Until ati and nvidia come out with compatible drivers, you have to keep xorg-server 1.1.0 and the keyboard/mouse/video drivers from the xorg 7.1 release masked. Then, when xorg-server is downgraded the block will be removed and you can emerge ati-drivers.